While buying a life insurance policy, especially term insurance where the sum assured is typically higher, people doubt whether the insurance company will pay the claim to the nominee or not. The concern is genuine, because in some cases claims are denied or get rejected because of various reasons. For instance, as per Insurance Regulatory Development Authority of India (IRDAI), in 2016-17, life insurance companies settled 8.60 lakh claims on individual policies, but repudiated or rejected 12,769 claims.

However, if you make all the disclosures and provide correct information and documents while buying a policy, you need not worry about claim rejection. Also, insurance companies can’t deny a claim after the expiry of three years from the date of issuance of the policy, according to a clause in the Insurance Act.

The clause

Earlier, life insurance companies couldn’t deny a claim made after two years of policy issuance except on grounds of fraud; the onus to prove the fraud was on the insurer. But after an amendment in Section 45 of the Insurance Act, 1938, an insurer has only three years to call a policy in question. After the expiry of three years, an insurance company cannot deny any claim on any ground whatsoever.

Remember in case of revival of the policy, the three-year clause will be effective from the date of revival and not from the date of issuance.

Full disclosure

To ensure the insurer doesn’t question the policy or the claim in the first three years, disclose all the facts and documents the insurer asks for before issuing the policy. Disclose your correct age, occupation, health condition, income, family history and other details in the proposal form, as well as details of your existing policies and cover. Don’t forget to disclose the nominee’s name.

Above all, fill the insurance application form yourself. If, say, an insurance agent or banker fills the form for you, go through the form twice before signing the dotted line.

Once you receive the policy document, cross-check the information mentioned in it and make sure it matches the details filled in the form. If there are any mistakes, get them corrected at the earliest.

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